Housing Market Emerges From Slump

WASHINGTON/WSJ — New-home sales climbed more than anticipated in July, staging their fourth straight month of strong gains to add to evidence that the housing market is emerging from its long slump. Sales of single-family homes increased by 9.6% to a seasonally adjusted annual rate of 433,000 compared to the prior month, the Commerce Department said Wednesday.

That was the highest number sold since September 2008 and well above projections for a 1.6% gain to 390,000 by economists surveyed by Dow Jones Newswires. The increase was the fifth in seven months, as buyers are returning to the market in search of bargains. The market for new homes appears to have bottomed in January, when sales hit 329,000 (see chart above).

MP: Commerce also reported that the supply of new homes fell in July to 7.5 months, the lowest inventory of new homes in more than a year (see chart above), and almost 5 months below January’s peak reading of 12.4 months, providing more evidence that the real estate slump is ending.

Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.

He holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University in Washington, D.C. and an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota.

Since 1997, Professor Perry has been a member of the Board of Scholars for the Mackinac Center for Public Policy, a nonpartisan research and public policy institute in Michigan.